The TCP — A Project of Common Interest
For several years, there was a lack of clarity on a key issue: would the ‘Trans-Caspian Gas Pipeline’ (TCP) become a part of the project known as Nabucco or of any other extensive pipeline project? When would this happen? Or, should it be an operationally independent component of the ‘Southern Gas Corridor’ (SGC) chains?
The answer came on 14 October 2013, when the TCP appeared in the European Commission’s list of key selected energy infrastructure projects designated as ‘Project of Common Interest’ (PCI), as a separate project and as a component of two SGC pipeline chains leading from Turkmenistan to the EU.
For several years, there was a lack of clarity on a key issue: would the Trans-Caspian Gas Pipeline (TCP) be connected up with a more extensive project such as Nabucco or another, and when would this happen? Or should the TCP it be an operationally independent component of the Southern Gas Corridor (SGC) chains?
The answer came on 14 October 2013, when the TCP appeared in the European Commission’s list of key selected energy infrastructure projects designated as Projects of Common Interest (PCI), as a separate project and as a component of two SGC pipeline chains leading from Turkmenistan to the EU.
These Projects of Common Interest benefit from accelerated licensing procedures and improved regulatory conditions and will have access to financial support from the Connecting Europe Facility (CEF), which has been allocated a €5.85 billion budget, inter alia for co-funding strategically important projects for the period 2014 to 2020. The listed projects will be implemented faster and be more attractive to investors. These projects also automatically become potential beneficiaries of the so-called “Junker Investment Plan” of 2014, one third of which (circa €100 billion) is planned to be used for energy related investments.
The TCP as a PCI project
The TCP has been included in the PCI list and our company W-Stream Caspian Pipeline Company Ltd was assigned a Project Promoter status, thus providing exclusive eligibility to benefit from public financing sources for development and construction of the TCP project. Our work from 2005 has greatly contributed towards this achievement. W-Stream Caspian Pipeline, as an assigned promoter of the TCP, now enjoys exclusive rights to financial support for the project via special grants from the EU budget, which could cover up to 50 per cent and even, if justified, up to 75 per cent of construction costs. It will also be eligible for favourable credit terms through the European Investment Bank and other institutions.
The inclusion of the TCP as an individual project within the SGC bundles is based on evaluation of our findings summarized in the formal submission of the TCP project for the PCI status. The EU evaluated it against the set of criteria elaborated for such purpose: effect on the security of supply, market integration, enhancement of competition and facilitation of renewable energy use. TCP has a dedicated legal/commercial entity as a promoter in the form of the W-Stream Caspian Pipeline Company Ltd.
Thus, it can benefit directly from EU funding under the CEF to work towards implementation of the TCP (completing the necessary studies and facilitating better alignment of parties, as well as serving as a crystallization centre for attracting large scale investments). By making the TCP a PCI, and its promoter eligible for EU public funding, the EU made a major step in building confidence in its resolve and intention with Turkmenistan, other relevant governments, and the business community.
The TCP’s Geographic Place in the Southern Gas Corridor
The TCP’s Programmatic Place in the Southern Gas Corridor
With the development of a Caspian gas supply scheme within the Connecting Europe Facility, the TCP has become an essential component of the two key Southern Gas Corridor pipeline chains forming the Projects of Common Interest of the EU, to transport gas supplies from Turkmenistan and Azerbaijan, and possibly in future also Kazakhstan and Uzbekistan. Both components of the bundle start from Turkmenistan using the TCP, link into the expanded South Caucasus Pipeline (SCP), then split into two trunks that will provide two entry points into the EU energy market. One of these entry points is via the system comprising the Trans-Anatolian Gas Pipeline (TANAP) across Turkey plus the Trans Adriatic Pipeline (TAP) running Greece-Albania-Italy under the Adriatic Sea. The other entry point is via the White Stream pipeline across the Black Sea.
According to adopted EU documents, at least 10 to 20 per cent of the EU gas demand is to be met by deliveries through the Southern Gas Corridor in the near future. This corresponds to a minimum of 45 to 90 billion cubic metres per year (bcm/y). Azerbaijan will be capable to supply 10 bcm/y to Europe starting in late 2020. Turkmen gas could flow to the West at the same time.
An important factor for the EU market, as well as for governments in the Caspian region and potential upstream investors, is the security and continuity of transit. The coordinated development of TANAP and White Stream, both in conjunction with TCP, will offer producers and shippers security of export. These projects are therefore mutually reinforcing and the important result is not only 60+ bcm/y of additional capacity, but also a reduction of perceived transportation risks.